United States: California Public Utilities Commission Opens Two New Investigations

Tara S. Kaushik is a Partner and Kevin John Ashe is an Associate in our San Francisco office.


On June 27, 2019 the California Public Utilities Commission (CPUC or the Commission) filed two Orders Instituting Investigations (OII) to investigate (i) the safety culture of Southern California Gas Company (SoCalGas) and its parent company Sempra Energy, and (ii) SoCalGas' role in the Aliso Canyon natural gas leak. Market participants and stakeholders should play close attention to these investigatory proceedings, as they show a pattern where the Commission is closely evaluating utility companies' organizational structure and "safety culture."

SoCalGas Safety Culture Investigation

Prompted by the Aliso Canyon gas leak and 2017 rupture of Line 235-2 in San Bernardino County, this investigation covers the overall safety culture and governance of Sempra Energy and its subsidiary, SoCalGas. The investigation seeks to determine whether leadership at Sempra Energy and SoCalGas prioritize safety and accountability. The Commission's Safety and Enforcement Division (SED) — which is charged with assessing the "culture, governance, policies, practices, and accountability metrics" relating to SoCalGas's operations — has been charged with assessing whether the companies' policies and governance promote "a clearly articulated set of principles and values with a clear expectation of full compliance at each level of the organization." The Commission has specifically tasked SED with evaluating whether SoCalGas effectively communicates its safety principles internally, and whether employees operate uniformly in full compliance with those principles.

Particularly, the Commission states a concern that SoCalGas has not implemented established industry practices for well management, and has failed to perform well failure investigations and risk assessments. The investigation will review SoCalGas's operation details for the past few years including revenue goals, budgets, staffing and spending to assess compliance with regulations. Also, the proceeding will review board and executive leadership's safety experience and commitment to safety culture as well as how executive compensation promotes safety.

The Commission has stated that it will explore "linking return on equity to safety performance and periodic review of SoCalGas' certificate to provide utility services." With this emphasis on safety culture, and consistent with the Commission's treatment of Pacific Gas and Electric (PG&E), it is likely that the Commission will order SoCalGas and Sempra Energy to implement safety recommendations made by SED in its consultant's report.

The Order adds to the recent saga of CPUC efforts to investigate utility safety culture. The first such investigation reviewed the safety culture of PG&E after the explosion at its San Bruno pipeline in 2010. Northstar, a consulting group responsible for the PG&E audit, concluded that a responsive utility's safety culture requires: comprehensive training of personnel, a sense of urgency in speed of change, company-wide communications, continuous evaluation of the effectiveness of policies and consistency between corporate and field practices. Following issuance of Northstar's report, PG&E was ordered to develop a comprehensive safety strategy that included specific timelines, resources to be allocated, personnel requirements and clear action plans and metrics. PG&E's safety culture proceeding remains active today. Most recently, the Commission ordered the utility to submit safety qualifications and expertise of the newly appointed Board members, and the assigned Administrative Law Judge requested comments on a number of threatening proposals ranging from periodic review of PG&E's certificate of public convenience and necessity to breaking up the utility's corporate structure.

While the consequences of PG&E's and now SoCalGas' safety culture proceedings remain to be seen, one thing is certain: the Commission is now taking safety culture seriously, and is augmenting its traditional oversight controls to ensure an organization's culture fosters safe service.

Aliso Canyon Investigation

On June 27, 2019, the CPUC filed a second OII to determine whether SoCalGas violated the Commission's decisions, General Orders and/or other applicable rules and requirements in connection with the uncontrolled release of natural gas from Oct. 23, 2015 to Feb. 11, 2016 (111 days).

The Commission stated it had sufficient evidence to commence a formal investigation based on the findings of a report of an independent consulting company retained by SoCalGas, who conducted an investigation into the cause of the accident. According to the OII, that report found that the leak was primarily caused by microbial corrosion.

The Order invites comments as to whether SoCalGas should be required to reimburse the state for the costs of this investigation. SoCalGas filed a timely response questioning the Commission's authority to require reimbursement of the costs before any determination of fault. SoCalGas argues that such a request is premature and inconsistent with due process.

SoCalGas is required to submit its response within 30 days (i.e., by July 27, 2019). The utility must specify any objections it has to the scope of issues, and whether a hearing is necessary. A prehearing conference will also be scheduled between Aug. 11, 2019 and Aug. 26, 2020. The Commission also anticipates the need for evidentiary hearings resulting from expected disputed issues of material facts.

The Order represents just one of many ongoing investigations facing California's investor-owned utilities. On the same day that the Commission filed the Order, the Commission initiated an investigation against PG&E for its role in the 2017 Northern California Siege fires. As this has the potential to impact how closely the Commission will regulate utility corporate structures and operations in the near future, interested parties and stakeholders should monitor these proceedings closely.

Deborah Bundy | Peter Holl assisted with this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions